Those of us that own San Diego real estate, and those that are looking to buy their first home, have all heard the multitude of opinions out there regarding where our local market is at right now, most notably asking “Are we at bottom???”  “Is not the time?”   We can speculate all day long as to when the bottom of the market will (or if we are seeing it now).  But the best way to gage what might possibly be ahead is to look at the numbers.

Three years ago we were looking at 23,000 homes and condominiums on the market for sale.  Today that number has seen pretty much a 50% reduction with only about 13,000 units on the market in May.   And three years ago many of those units for sale were being sold by speculating investors looking to turn a quick buck.  Today over half of the units sold are either foreclosures or short sales.  Those people who don’t have to sell are waiting it out until they see some normalcy return to the market. 

In addition, the foreclosure / short sale market is gradually running out of product and the availability gets picked over very quickly.  It is now common place for “decent” properties to draw 15 - 20 full price offers quickly after being placed in the MLS with frenzied bidding very often going over the asking price.  One year ago, the average monthly resales ranged from about 1200-1500 units.  Today it is more than double that!  So the inventory is getting eaten up with much lower pricing in some localized markets.  Case-Schiller reports state that our residential real estate values have dropped more than 40% in the last two years. But that is only factoring in detached homes that have sold twice in a short period of time… which are very likely foreclosures and give a skewed snapshot of the market.  For most homes, the decline is significantly less than that and in some cases values have declined less than 10%.  It just depends where you live. 

As the San Diego County population continues to grow (by some 40,000+ people a year) and the job market gradually strengthens, eventually we will see a significant supply shortage without enough housing to meet the needs of the populace (when you take into account that building has decreased to a point that will now allow enough supply by the time things do catch up).  This may occur as soon as three years from now.  If you are thinking of jumping in…  jump now.

This entry was posted on Monday, June 29th, 2009 at 12:04 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.